You know you can upgrade to Windows 7 and keep all your settings, files, favorites, program, background picture etc etc as it is right?
Pop in the Windows 7 DVD and pick upgrade instead of custom new installation, no files will dissapere and you will keep all but GUI as it was 
No, this is not the case. You cannot "upgrade" from XP to 7. You can upgrade from Vista to 7, but cannot go from 32-bit to 64-bit. Also, I'd never recommend "upgrading" - you are much better starting clean.
There is a migration tool Microsoft has that backs up data & settings, which you then can use to restore after you do a clean install of Windows 7. But, if you're reasonably computer literate you can certainly copy off all that data manually and restore it when done, rather than trusting their tool to get everything you need.
